PHEAA plans to close loan servicing center in Philly suburbs

The state’s student loan agency is closing a service center in the Philadelphia suburbs, citing uncertainty over a new contract with the federal government.

The Pennsylvania Higher Education Assistance Agency plans to close its call center in Chester by the end of 2020. The center employs 96 workers and those employees are being given the option to re-locate to another one of PHEAA’s offices, said Keith New, an agency spokesman. The Chester center’s employees were notified today, he said.

PHEAA doesn’t anticipate closing any other call centers at this time, New said. He said the student loan agency remains financially healthy.

“We still have a growing line of business,” New said.

When the Chester center closes, New said PHEAA’s other call centers will be able to absorb the work, so customers shouldn’t notice any difference in service.

The closure of the Chester call center comes as PHEAA has taken a number of other steps to cut costs.

PHEAA has previously announced plans to vacate the space it uses for a call center in the Westport Business Center in Lower Allen Township, Cumberland County. That call center, which employs nearly 500, is expected to be closed by the end of 2019, New said. The workers in Lower Allen are being moved to PHEAA’s headquarters in Harrisburg.

In May, PHEAA said it was outsourcing jobs held by 40 workers. The agency transferred the work to Wipro, an India-based global digital technology company, and subcontractor Ensono, a Chicago area-based mainframe service provider.

The closure of the Chester center is tied to the expiration of PHEAA’s contract with the federal government to service student loans. The federal contract actually expired in June but was extended through the end of this year. The Chester office services federal loans.

The agency is hoping to secure a new federal contract. PHEAA currently services more than $360 billion in federal student loans for 7.2 million borrowers.

“We expect to play a role in that in the future,” New said.

While New anticipated that PHEAA would continue to service federal loans, the lack of certainty over when the federal contract would be renewed or extended prompted the agency to exercise an early exit from its lease in Chester.

“It didn’t make good business sense to continue that lease long-term without having that certainty” of a federal contract, New said.

New said the agency wanted to give workers in Chester as much notice as possible, which is why the closure was announced today even though the office won’t be shut down for more than a year.

PHEAA manages the state grant program for college students and other student aid programs. The agency also services private loans.